Insurance options for your growing online business

Unless you’ve been living under a rock for the last 20 years or so, you’re probably well aware of how the eCommerce world has taken off. At this point, there is pretty much nothing out there that a person can’t buy online… and if someone’s buying, there are of course people selling.

Some people just like to dabble in online sales. Maybe they find a record collection at an estate sale and decide they want to auction it on eBay. Or they’ve heard they can make lots of cash in the retail arbitrage game, but quickly realize there’s a lot more to it than always having a pallet of Charmin in your garage.

Other people have built a solid business, staked their whole livelihood, and in many cases the livelihood of their families, on their online venture. These are some true pioneers, often flying without a safety net in a vaguely defined eCommerce space that doesn’t always support them or their needs. But times, they are a-changin! And online sellers are starting to be recognized as the bread winners for themselves and their families. This is now a legit career, and that’s great news.

The road less traveled by

These people are self-employed and don’t fit into a lot of the normal “boxes” when it comes to the way traditional insurance policies are written. One of the biggest dangers they face is not professional liability, like so many self-employed people, but actually having their income taken away, at a moment’s notice, due to actions outside of their control.

Amazon.com can be a wonderful place to launch an online selling career. With so much organic traffic, excellent advertising tools, and options like Fulfillment by Amazon (FBA) which practically lets you “set it and forget it” when it comes to the fulfillment of your orders, it really is a great place to get started.

It is also an unfortunate fact though, that Amazon can and does remove listings, and entire seller accounts, for often vague and sometimes incorrect reasons. And when the reason for ASIN suspension or removal of selling privileges does turn out to be inaccurate, Amazon is usually happy to reverse the decision, but sometimes this can take a lot of time and persistence.

So how long could that investigation take? How many bills will stack up in the meantime? At Cascadia Seller Solutions we’ve seen some pretty sticky situations. In one of the worst, Amazon was entirely in the wrong, and the investigation still took almost three months. The account averaged about 90k in sales, on a monthly basis. Amazon’s mistake cost them about 200k in sales! And at the time there was no insurance for them, to protect that income they’d come to rely upon.

Another seller took six months to get back up and running. We kept trying different approaches and were eventually successful, but the seller lost nearly half a million in revenue.

But now, there is finally some level of protection for Amazon sellers! There is a way you can move confidently into the future of online sales, knowing that if there is ever a disruption in your ability to sell, you will still be able to make ends meet, for at least enough time to shift your income streams and adjust to the situation rather than having your entire livelihood destroyed.

Two great companies are now offering this type of insurance protection: WELL Insurance, and NAS Insurance.

Momentum by NAS Insurance

NAS Insurance has underwritten specialty insurance products for over 40 years, and has an in-house claims handling team that works closely with the insured throughout the life of a claim. They developed Momentum to protect Amazon sellers from the financial burden of dealing with an account suspension.

Momentum provides two main coverages during an account suspension:

Suspension Loss (coverage available for up to $1,000,000): When your account is suspended, you’re unable to sell your product(s) until you’re reinstated. If you can’t sell your products, you can’t make money—but in the meantime, you have financial obligations to uphold. Momentum will reimburse you for your financial loss for up to 30 days so you can get back on your feet.

Suspension Appeal Expenses (coverage available for up to $25,000): Having your account suspended is stressful enough, without having to navigate Amazon’s complex appeal process. Sometimes sellers decide to write their appeal themselves due to budget constraints, or simply because they don’t know where to turn for help. With Momentum, your costs to hire a reinstatement specialist are covered, so you can let an expert handle the dirty work, while you focus on the rest of your business.

In addition, Momentum includes coverage for Tax Audit Expenses. This covers your expenses to hire a tax expert during a tax audit, so you can let the experts work out those tricky tax compliance laws while you focus on selling.

What don’t they cover?

Generally speaking, they will not cover suspensions that result from criminal acts, including counterfeit activities, or any intentional violation of Amazon’s selling policies.

What are the terms and conditions?

Momentum policies are renewed annually, and coverage is based on projected annual sales in addition to the amount of coverage desired by the seller. The deductibles are as follows: Suspension Loss is subject to a 5-day Waiting Period; Suspension Appeal Expenses are subject to a $250 deductible; and Tax Audit Expenses are subject to a $250 deductible.

With Momentum, you are not required to hire a reinstatement specialist to activate coverage. If you decide to hire a reinstatement specialist, you are free to choose any expert of your liking. Momentum will even reimburse you if you use more than one reinstatement expert or if you purchase expedited services, as long as it is reasonable and necessary to reinstate your account.

Do you get covered the second time you’re suspended?

There is no cap to the number of covered suspensions or audits, as long as you have not exhausted your coverage limit (determined by the amount of coverage chosen at the time of purchase.) Momentum will not, however, pay for Suspension Loss resulting from your failure to appeal a notice of Suspension, nor will they provide coverage if you are suspended multiple times for the same reason.

How much does a Momentum policy cost?

Momentum policies start as low as $250 annually. Your annual premium will depend on several factors including your annual gross sales and the amount of coverage you want. To get a better idea of your estimated annual premium, you can use their handy coverage calculator on their website.

WELL Insurance understands that there’s never a “good time” to have your Amazon Seller account suspended, and when it happens, the only think you can think about is getting it back!

With Expense Defense, you have a lifeline. The rules are simple, the coverage affordable, and the piece of mind invaluable.

When you’re covered by Expense Defense, if the worst happens, you just choose from one of several pre-approved Reinstatement Specialists. These companies are hand-picked by WELL Insurance, and have a strong reputation for successful reinstatements.

Your Expense Defense policy covers the fee, based on the level of coverage you selected when the policy was written.

If you’re not back up and selling within 5 days, Expense Defense begins covering your daily expenses for up to 30 days as shown on your current Profit & Loss statement, including:

Cost of Goods Sold

Payroll

Rent

Loan Payments

Shipping

Advertising

Professional Fees

Insurance

Property Taxes

Licenses and Subscriptions

Utilities

Interest Payments

Service Agreements

What don’t they cover?

The Expense Defense Suspension Policy will not cover Intentional Acts on the part of the seller. In other words, if you don’t play by the rules and you’re caught violating Amazon’s terms of service, or the conditions of your Expense Defense policy, coverage will be denied.

What are the terms and conditions?

It’s a very simple policy… it automatically renews every month, covers the following 30 days, and has a 5 day deductible. So, should something happen at any point in any calendar month, after 5 days the coverage will start kicking in.

Is there any situation where a claim would be denied?

The only time a claim would be denied is if it was due to an intentional act, as mentioned above. Any other suspensions would have coverage, and all claims that have so far been made, have been paid in a matter of weeks.

One of the largest payouts on this policy to date is $77,000. The seller paid a premium of $185.60 and was paid $77,000, plus $750 to help with the cost of hiring our team at Cascadia to help with becoming active again.

Do you get the same level of coverage in all claims?

As long as you’re not making a claim for the exact same reason as before, because you failed to truly remedy the problem the first time around, there would be coverage available to you.

The freedom to try

It’s so great that we now live in a world where there are insurance options for less traditional jobs. Where it once would be considered too risky to venture out on one’s own, safer to just stay with the corporate job or in the more secure place, now we have more latitude. Now we have another chance to give something new a try.

Both of these policies offered by NAS Insurance and WELL Insurance are backed by Lloyd’s of London, and offer real support and protection at a time when a seller really needs it. The uncertainty of what will happen with your business, doesn’t have to be compounded by uncertainty about how your bills will get paid, and that’s a wonderful thing.

With insurance to protect you as an online seller, you’ll have the resources to make sure your interests are protected, and to put your best foot forward with a proper, professionally-written appeal to Amazon. This means that a suspension will only ruin your day (or week), not your life, and that’s huge.

About the Author

After my last stint in Product Safety at Amazon from 2011-2014, I decided a change was in order so I packed up and moved to Puerto Vallarta Mexico to be a travel blogger and freelance writer. I found living in another country to be fantastically inspiring in many ways, and soon after my move, I joined Cascadia. I was then able to focus that creative inspiration on helping clients with really great marketing content, and other aspects of their product launches which they might find daunting. It’s been wonderful! I love helping people, and I love writing. So for me, it’s a match made in heaven.